I almost never, ever write about politics. I steer well clear of it. However, I’m going to risk it because I’m not sleeping well right now because it looks like my country, the once United States of America, is about to drive itself off a cliff.
When I say the coverage of the almost entirely self-inflicted US debt crisis is unbalanced, I don’t mean lacking objectivity or prejudiced, I mean insane. Balanced coverage would quote Tea Party darling Michele Bachman saying that there isn’t anything to worry about and Tea Party darling Jim Demint saying this is “manufactured crisis” on one side and then queuing up economist after economist, the ratings agencies, major financial companies, Fed chief Ben Bernanke, Treasury Secretary Tim Geithner and just about every other credible economic and business voice on the other side. As Dana Milbank of the Washington Post wrote in referring to 20 Tea Party Republicans as the Default Caucus:
So far, the Default Caucus is disregarding the advice of the Wall Street Journal editorial board, warnings from Standard & Poor’s, the record of Ronald Reagan and even the permission of Grover Norquist, the conservative loyalty enforcer who said that ending the Bush-era tax cuts would not violate lawmakers’ anti-tax pledges.
Not to quote too liberally from Milbank’s column, but this is the problem:
A Pew Research Center poll last week found that 53 percent of Republicans, and 65 percent of Tea Party faithful, believe that the Aug. 2 default deadline can be ignored without major problems.
A responsible press would be driving home the point to all who cared to listen that this will have consequences. Dire ones. It’s not just another government shutdown like 1994. No, even if a default doesn’t happen immediately because the US can’t meet its obligations, the ratings agencies will downgrade the US debt rating almost immediately. That may be abstract to most Americans, but it will have real and immediate consequences. Doing nothing is not an option, and it may already be too late to convince the ratings agencies that the US government isn’t broken.
I couldn’t agree more with US National Public Radio’s On the Media, when they criticised the US media for covering the political drama while almost entirely missing the point. They interviewed Rick Newman of US News and World Republic, not exactly a liberal publication, who said:
the Republicans are digging in their heels and saying no tax increases. And President Obama has basically said he will accept something that is about 75 percent spending cuts and 25 percent tax increases. That is a moderate position, based on the whole range of recommendations we’ve seen, but the media is struggling with how to re – relate to that. So they have to say Obama, on one hand, and these Republicans, on the other hand. And that’s where I think people get pretty confused.
As an American journalist, I was trained in objectivity. It is not a violation of objectivity to accurately portray what is at stake here. With a downgrade, borrowing costs will be higher. Overnight, the cost of serving the US debt will rise because it will be more expensive our basket-case government to borrow money. Recovery? Buh bye! Some economists estimate that for every 50 basis points (half a point of interest) rise in borrowing costs, you can kiss 600,000 US jobs goodbye. (A post by Ezra Klein at the Washington which will be quickly dismissed by conservatives as from a liberal rag.) Interest rates will rise making borrowing for average Americans higher. Americans, who like me, want to buy a house, will find it harder to finance. The already fragile housing market will take another knock. These are on the mild end of predictions. It goes rapidly downhill from there.
A few years ago, I chaired a panel about journalism and the financial crisis. A good friend, Kate Mackenzie from the FT, expressed some justified frustration when time and again the audience asked why journalists didn’t warn them of the coming debt-fuelled financial crisis. The general press mostly missed it apart from a few. However, Kate was right in pointing out that the business press had been covering this for at least two to three years before the crisis hit. I remember reading a Bloomberg magazine cover story titled Toxic Debt, all about CDOs and how they hid ridiculously risky assets including sub-prime mortgages. I read that in the summer of 2007, and I came home telling Suw that this could be 1929 all over again. It nearly was, and now, this crisis is entirely created by childish leaders who want it all and won’t compromise. As for the anti-compromise brigade, I hold Huffington Post liberals almost almost as responsible as the Tea Partiers. Both have made compromise a dirty word in Washington. Compromise is a sign of maturity. You never get everything you want. Most of us learned that on the playground as children.
With this balanced budget debt debacle, we can see this one coming. We can do something about it. We will have no one to blame but ourselves.
As a journalist, I’m paid to pay attention, and I’ve been paying attention from the start. This is serious. The clock is ticking on the US. There wasn’t any time to waste a month ago, and the political posturing has to stop. The Republicans are now accusing Barack Obama of playing politics and looking to his re-election. As if they aren’t. As if the half of the Republican Party queuing up to take his job isn’t looking to 2012. Don’t be silly.
The US is about to face a debt downgrade and possibly a default. It could take us back to the stomach-churning autumn of 2008 when the global economy hung in the balance. This is serious, and it needs some maturity and some compromise. I’d really like to come home, but I won’t be able to move back to the US if the Tea Party wrecks the economy. Man up both Republicans and Democrats. Too much is at stake to pander to those who won’t accept reality. My fellow Americans, get on that phone now. Call your Senator. Call your member of Congress. Your future, our future is at stake.
